Could market power explain hub premiums?

Chi Lok, Andrew YUEN; Zheng LEI; Kong Wing, Clement CHOW; Ka Yiu, Michael FUNG

doi:10.1016/j.jairtraman.2017.06.024

Could market power explain hub premiums?

Chi Lok, Andrew YUEN, Zheng LEI, Kong Wing, Clement CHOW, Ka Yiu, Michael FUNG

Department of Marketing and International Business

Research output: Journal Publications › Journal Article (refereed) › peer-review

3 Citations (Scopus)

Abstract

Hub carriers tend to charge higher fares to their passengers at their hubs. The additional charge is called the hub premium. Different studies have discussed the possible causes of the hub premium. Using the fare data at Hong Kong International Airport, this paper aims at empirically examining the factors affecting the hub premium for both economy and business class markets. The random effect models are employed in the analysis. Consistent with the theoretical results in the literature, airport market concentration, market power, flight frequency and distance are identified as significant factors that affect the hub premium in Hong Kong. In addition, this paper further investigates the impact of strategic alliance and the acquisition of Dragonair by Cathay Pacific on the hub premium.

Original language	English
Pages (from-to)	55-59
Number of pages	5
Journal	Journal of Air Transport Management
Volume	64
Issue number	A
Early online date	13 Jul 2017
DOIs	https://doi.org/10.1016/j.jairtraman.2017.06.024
Publication status	Published - Sept 2017
Event	The 19th Air Transport Research Society (ATRS) World Conference - National University of Singapore, Singapore, Singapore Duration: 2 Jul 2015 → 5 Jul 2015 https://www.youtube.com/watch?v=dd2avdKJ0LQ&feature=youtu.be

Bibliographical note

Paper presented at the 19th World Conference of the Air-Transport-Research-Society (ATRS), Jul 02-05, 2015, Singapore.

Access to Document

10.1016/j.jairtraman.2017.06.024

Cite this

@article{2a853b2d94cd49f48373e7e6413fc4ba,

title = "Could market power explain hub premiums?",

abstract = "Hub carriers tend to charge higher fares to their passengers at their hubs. The additional charge is called the hub premium. Different studies have discussed the possible causes of the hub premium. Using the fare data at Hong Kong International Airport, this paper aims at empirically examining the factors affecting the hub premium for both economy and business class markets. The random effect models are employed in the analysis. Consistent with the theoretical results in the literature, airport market concentration, market power, flight frequency and distance are identified as significant factors that affect the hub premium in Hong Kong. In addition, this paper further investigates the impact of strategic alliance and the acquisition of Dragonair by Cathay Pacific on the hub premium.",

author = "YUEN, {Chi Lok, Andrew} and Zheng LEI and CHOW, {Kong Wing, Clement} and FUNG, {Ka Yiu, Michael}",

note = "Paper presented at the 19th World Conference of the Air-Transport-Research-Society (ATRS), Jul 02-05, 2015, Singapore.; The 19th Air Transport Research Society (ATRS) World Conference ; Conference date: 02-07-2015 Through 05-07-2015",

year = "2017",

month = sep,

doi = "10.1016/j.jairtraman.2017.06.024",

language = "English",

volume = "64",

pages = "55--59",

journal = "Journal of Air Transport Management",

issn = "0969-6997",

publisher = "Elsevier Ltd",